Liffe December white sugar rose $11.50 to end at $745.50 per tonne on Tuesday after earlier touching $756.60, the highest level for the front month since January. A tight supply outlook and concerns over whether India will permit exports remained key supportive influences.
Liffe January robusta coffee ended $11 higher at $1,939 per tonne. Market supported by a weaker dollar and gains in other commodity markets. Liffe second-month March cocoa ended 26 pounds higher at 1,894 pounds a tonne, swept higher in the broad-based rally in commodity markets.
"We have uncertainty over Indian exports in 2010/11, and we have relatively tight global supplies," said Andrey Kryuchenkov, a fund manager with VTB Capital in London. London front-month white sugar futures touched a nine-month high of $756.60 per tonne, before losing some ground to stand at $751.10 per tonne, up $17.10 or 2.3 percent, in modest volume of 2,764 lots.
Many analysts expect Brazil to produce less sugar next year, and see a global trade flow deficit emerging in the first quarter of 2011. Dealers said buying by investment funds helped to drive prices above 30 cents a lb while there were few sellers, with producers holding back waiting for even higher levels. "Producers do not see the market as a selling opportunity," said Alex Oliveira, sugar analyst at brokerage Newedge USA in New York.
Reuters market analyst Wang Tao said on Tuesday that prices are expected to rally into a range of between 30.60 and 30.90 cents as indicated by a bullish triangle. Jonathan Kingsman, managing director of consultancy Kingsman SA, said last week at a London Sugar Week seminar that sugar prices could double if India did not permit exports. Most analysts including Kingsman believe India will allow exports. The key question is how much and when. A widely expressed view at London Sugar Week was that India would allow some 2.5 million-3.5 million tonnes of exports in 2010/11.
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